Skip to main content

About this Show

Your Money

News/Business. Ali Velshi. CNN anchors break down the financial news of the week. New.

NETWORK
CNN

DURATION
01:00:00

RATING

SCANNED IN
San Francisco, CA, USA

SOURCE
Comcast Cable

TUNER
Virtual Ch. 759 (CNN HD)

VIDEO CODEC
mpeg2video

AUDIO CODEC
ac3

PIXEL WIDTH
1920

PIXEL HEIGHT
1080

TOPIC FREQUENCY

Grover Norquist 16, Us 13, Norquist 9, U.s. 7, America 6, Washington 6, Obama 5, Ali 5, Canada 4, Christine 3, Kevin 3, Bob 3, Warfarin 3, Volkswagen 3, United States 3, Malibu 2, Germany 2, Europe 2, Jessica 2, Superstorm Sandy 2,
Borrow a DVD
of this show
  CNN    Your Money    News/Business. Ali Velshi. CNN anchors  
   break down the financial news of the week. New.  

    December 1, 2012
    10:00 - 11:00am PST  

10:00am
they can help, but recent research shows... ... nothing transforms schools like investing in advanced teacher education. let's build a strong foundation. let's invest in our teachers so they can inspire our students. let's solve this. we'll be back in one hour with more information for you and update on the murder-suicide of a kansas is they chief linebacker. "your money" starts right now. the world is finally paying attention to the fiscal cliff. ufr known about the economic storm of our own making for months now. this is "your money." i wasn't waiting for the elections to end to focus on this major threat to the
10:01am
economy. i wish others had. it would have given us more time to fix this major problem. now there is a focus on one thing and one dangerous man, a man who's not elected, who's never run for office, and is standing in the way of a potential economic disaster. he's been called a kingmaker, a patri patriot, and the ideological godfather of the tea party. since the mid 80s, grover norquist has been the driving force behind the anti-tax movement. his goal, to take big government and in his words, drown it in the bathtub. norquist's weapon is the taxpayer protection pledge which was at one point signed by 95% of gop members of congress. raise your hand if you feel so strongly about not raising taxes. >> on the campaign trail this year, only one republican presidential conditioned date,
10:02am
john huntsman, dared to cross him. norquist has clout. he is called the most powerful unelected man in america today. >> he signed a pledge, it's without congress. >> i'm not obligated on the pledge. >> republicans are jumping ship and supporting unspecified revenue hicks to cut the deficit and big business resigned to higher taxes. here is lloyd blankfine. >> we had to lift up the marginal rate. >> norquist's response? >> some of these people have had impure thoughts. no one pulled the trigger and voted for a tax increase. >> to be sure, norquist is still raking in big bucks. according to open secrets.org, he shelled out almost $14 million to defeat democratic opponents in this past election cycle. >> we've run ads to let people know who it taking the pledge and who doesn't. we'll do phones into letting
10:03am
people know who is taking the pledge. >> norquist's big backers are republican operatives, cross roads gps, the superpack led by kingpin karl rove and the center to protect patient rights. closely tied to the ultra conservative cook brothers. they account for a majority of the budget and there's no sign that they're running scared. norquist truly believes that best way to grow the economy is to tame big government. he told me recently he will be vindicated no matter how many politicians break the pledge. what happens if they break the pledge? you have money behind you. you pile on and try to get defeated in the next election? >> these are self enforcing. why? because the american people, the elected people who they want to reform government rather than raise taxes. >> norquist is clearly looking toward the 2014 midterm elections. one high profile figure from the fix the debt movement knows that norquist's clout is clearly waning.
10:04am
>> i don't view this as some -- as the end of grover norquist. i don't think he suddenly disappears. but i think his ora of invincibility has largely shattered. >> so can grover convince his pledge signers to not give in, no deal, no matter what the consequences to the economy? jessica yellen is the chief white house correspondent. mark preston is the political director, kevin glass, managing editor at townhall.com, a conservative political outlet and author of "the loophole in grover norquist's anti-tax pledge." mark, let me start with you. a majority of americans, this is fact, people are tired of me saying it. i'm tired of saying it to people. a majority of people support raising taxes on the rich. but everybody's taxes go up if congress doesn't get a deal. many republicans are stuck between this pledge they made to nor wi
10:05am
norquist and the real threat of taxes going up. how much power does grover norquist wheel in this environment? >> he wheeled power. the invincibility of grover norquist is overblown by us in the media. this tax pledge isn't with grover norquist as it is with taxpayers in the state that whoeted for the conservatives who signed the pledge. i think it's foolish to think there isn't going to be a deal cut. we don't know what the deal will be. it's fool toish think thish to drove us off the fiscal cliff. we're in the political dance now. we've seen this time and time again. there is still three weeks for a deal to be cut. the problem is that the white house threw down a heavy marker yesterday. we'll have to see if they're willing to compromise. it's got to be compromised on both sides. >> that's right. the marker they threw down, kevin, is it the white house says actual tax rates, the top tax rate, 35%, has to go up for the rich. and that limiting deductions
10:06am
won't be enough to get a deal. now you wrote in the atlantic this week that despite that there is a way around this for republicans who don't want to incur the wrath of norquist or as mark suggests, voters. how? >> right. so grover norquist pledge is actually incredibly misunderstood. it's based on what washington budgeting organizations call the current law baseline. what that means is that what scheduled to go into effect already is baked into the cake. and because the bush tax cuts are expiring provisions that were voted for ten years ago, it doesn't really count as a tax hike when they're already scheduled to take effect. so as long as republicans can just keep the revenue below what taxes would raise to in full expiration of the bush tax cuts, they won't be violating the pledge. >> kevin, that sounds incredibly reasonable. do you think grover norquist shares that interpretation? >> so there's an important distinction to be made between what the pledge actually says
10:07am
and what americans for tax reform, his activist organization advocates for. as grover said himself, the pledge is to the american people, not to grover norquist. so it's not just, you know, republicans need grover norquist's approval for what they want to do. it's more that americans for tax reform wants to keep tax rates low despite the fact that legislation says they're just going to go up no matter if congress doesn't do anything. >> all right. so compromise is going to require more than finding republicans who are willing to break with the norquist anti-tax pledge. the gop wants to know what the democrats are going to be willing to give up in the form of spending cuts. >> despite the claims that president supports a balanced approach that democrats have yet to get serious about real spending cuts. >> jessica, the president ran and won on a promise to raise taxes. i mean what a different scenario.
10:08am
a year ago you and i were talking about how this he lction was going to be about jobs. both campaigns made exactly the same promise about job creation. so that almost got off the table. it all became about taxes. he doesn't have to run for office again. could we make the case in order to get a deal the president should just put forward a big proposal to cut the size of government that is significant enough to give republicans the cover they need to agree to a deal that would meet that red line that you pointed out that means raising tax rates? is there a win-win for the president here? >> the win-win is -- sure, it's finding the middle ground. the dynamic as you point out changed, ali. it's clear that washington hasn't accepted the dynamic has changed. it hasn't fully settled in. as you point out, the president ran and won on a promise to raise taxes. the president will not back down from that. republicans are still not accepting that rates will go up. and that is the dividing line at
10:09am
this point. >> that's on the republican side. so if everybody involved would just tell the truth. now a lot of republicans have said that the white house and the president are not telling the truth that you could only achieve about a trillion dollars over ten years with this increase in tax rates to the top 2%. that means three quarters of that $4 trillion goal that president needs has to come from somewhere else and he's not saying where from. >> but they also made it clear -- first of all, they said they're willing to do $400 billion in medicare and other entitlement savings. and they also said that they're willing to be flexible beyond that. they won't talk about the numbers with us and the press and public. we know they won't negotiate the public. i asked them, will you go beyond -- essentially, will you go beyond that? they said, yes, we're open to negotiating. the bottom line is they indicated that they are willing
10:10am
to do more than that. that they're willing to open up what they were talking about during the debt talks t it comes to changing eligibility ages for some of these entitlement programs, raising -- changing the caps indexing for inflation, et cetera. they'll do it. but they want to start talking numbers with republicans. so, yes, they're willing to do more cuts. but they want the republicans to agree on revenue first. and they're emphatic that republicans aren't willing to talk about the revenue and so they can't start the negotiations. and this all for this week, but these numbers they came out with this week were an effort to try to prod some sort of specific discussion of numbers. >> it's a remarkable game of chicken. i'm quite happy they don't do the negotiations public. it doesn't matter to me, as long as they're going on somewhere. jessica, thank you. kevin glass and mark preston, thank you for joining us. 258 lawmakers who will serve in the next congress have signed
10:11am
the norquist pledge. just one of them is a democrat. you'll meet him next and find out if he's sticking to his guns. [ male announcer ] citi turns 200 this year. in that time there've been some good days. and some difficult ones. but, through it all, we've persevered, supporting some of the biggest ideas in modern history. so why should our anniversary matter to you?
10:12am
because for 200 years, we've been helping ideas move from ambition to achievement. and the next great idea could be yours. ♪ or that printing in color had to cost a fortune. nobody said an all-in-one had to be bulky. or that you had to print from your desk. at least, nobody said it to us. introducing the business smart inkjet all-in-one series
10:13am
from brother. easy to use. it's the ultimate combination of speed, small size, and low-cost printing.
10:14am
despite what you may hear in the news, there are members of congress willing to compromise despite having signed the norquist pledge to never raise taxes. i talked to grover norquist many times on this show. i'm going to continue to introduce you to those politician who's have had the courage to question whether a hard and fast rule is really best for the country. here's a running count of law makers who say they are willing to break the pledge that they have signed. we suspect that the empty spaces could fill up over the coming weeks. if you'd like to call your congressman and tell them that, that's up to you. but if you thought that norquist conservative anti-tax pledge is for republicans only, i want to introduce you to congressman robert andrews. he's a democrat from new jersey. congressman andrews, thank you for joining us. you are one of a handful of democrats who have signed on to the tax pledge. the only one in the new congress. you do not feel bound by it. in fact, you said you're married to your quif, not grover norquist. >> lucky me. >> lucky you.
10:15am
i agree with you. this is not normally thought of as a pledge for democrats. it's thought of as a republican pledge. why did you sign on to it in the first place? >> in 1992, i signed on to the pledge because i thought a tax increase at that moment in our economy would be wrong. and i honored the pledge. i voted against tax increases. my understanding was it was for that one congress. i never renewed it. i think that flexibility and doing what is right for the country is a heck of a lot more important. >> i'm looking at a copy of the pledge here. it has a lot of detail. it doesn't have an expiration date or reference to how long it s a number of your colleagues said the same thing. i signed it at a time. i don't think it's forever. the other democrats that signed the pledge were voted out of office or decided not to seek re-election. norquist groups spent upwards of $300,000 to defeat representative ben chandler from kentucky after he went back on the pledge. are you worried about the consequences? >> no.
10:16am
i'm worried about my constituents that are unemployed and struggling to make their businesses succeed or make home values go up. i think if we worried less about washington politics and more about the economy we would do a better job. i'm in favor of something like the simpson bowls approach being adopted here that has about $3 of spepding cunding cuts for ev dollar of new revenue, cuts the deficit by $4 trillion and gets the country back on track. >> that's where the sticking point is. we think the sticking point is just on republicans who don't want to raise taxes. but they say that it's on democrats who are not willing to cut spending. what democrarepublicans want to from democrats is what they're willing to agree to in exchange for the tax cut. three to one. it's an interesting number. do you have some sense though that once you start getting to real cuts all of the low hanging fruit is gone. now everything you cut is going to hurt. >> i agree. i think there have to be some
10:17am
mature decisions. look, i would favor on a fair and equitable basis a slight delay in the age at which people can get maid caredicare. you have to wait one month for every one year that you're under 55. so a person 5 0 years old will get their medicare when they're 60 and 5 months old. woint change it for anybody that is on medicare now. i would close about two-thirds of the military bases overseas in asia and europe. i would scale back -- i would get rid of the ethanol subsidy altogether. i'd scale back on the crop subsidies. i think there are things we have to do. i would do those things. >> congressman, pleasure to talk to you. thank you for joining us to day to give us a sense of where things should go. >> my pleasure, i'd like to be back. >> robert andrews, democrat from new jersey. coming up, there are cracks in the republican party. it's not just because of the norquist tax pledge.
10:18am
how to repair the gop message next on "your money." ♪
10:19am
[ male announcer ] it's that time of year again. medicare open enrollment. time to compare plans and costs. you don't have to make changes. but it never hurts to see if you can find better coverage, save money, or both. and check out the preventive benefits you get after the health care law. ♪ open enrollment ends december 7th. so now's the time. visit medicare.gov or call 1-800-medicare.
10:20am
10:21am
a republican party relaunch. obama is bad for the economy message didn't work and it's not likely to resonate going forward. home prices climbing, household debt down, consumer confidence up, jobs are coming back. breaking from that grover norquist anti-tax pledge is only going to take the gop so far if they can even deal with it. so can republicans find an economic message that resonates with voters? to find out, i spoke with stephen moore from the "wall street journal". >> looking forward, not backward, the republican dangers, there may be an accelerating economy. you can't simply say obama is bad. you have to have an affirmative message. it has to be economically inclusive. that means i think ruling away
10:22am
from the myth of the heroic entrepreneur as the main hero and also the main victim of the american economy and understand that the people who have been leading big companies are actually doing pretty well. the harm is to the middle. >> stephen, talk to me about this. the fact is we do think the entrepreneur as heroic in the u.s. how do you square that circle? >> i think the backbone is the entrepreneur. i think republicans have to make this connection with workers that, you know, if you hurt the businesses who are hurting jobs, i don't think they've done a good job of doing that. i certainly agree that health care is a big issue. i kind of agree with david that republicans have kind attacked
10:23am
the obama idea. i think reasons have to a very robust alternative that might be rejected in the years ahead. >> the problem is alternatives are lacking. criticism is in abundant supply. so, david, what do we do? where do the ideas come from? where is the well that republican party should be looking at for the new ideas? >> the republican party has to rebuild a lot of their ideas about the budget. you know what, on health care, for example, obama care is a fact. it is a fact. and its -- that's what this election decided it is not going to go away. so any republican idea about how maybe there will be a better way
10:24am
to do it or maybe we shouldn't have done this, those ideas are obsolete. >> let me ask you something, you are forever and have been a supporter of no tax increases and you wrote an op-ed about grover norquist. i'm not asking about whether taxes should go up. but is the tax pledge, is that kind of behavior standing in the way of reinvention of the republican party? >> i don't think so. i think it's just the opposite. the reason that the left and some of your friends in the media have really, you know, ganged up on grover norquist, they have really been extraordinarily hostile in their tax against them is that this has been really the fortress of the republican party. that no tax position has been the defining issue for the republicans. i still think by the way it's a winning issue. americans don't like taxes. they do believe that we have to cut spending first. >> let me interrupt. you and i, we talk a lot.
10:25am
at the beginning of this year jobs were far and away the most important economic issue. by the time people went to the ballot boxes, it had come down to taxes. so how do you figure that's a winning issue for the republicans when it was kind of repute yated? >> because there is two parties. there's a pro tax party and an addict tax party. republicans have to continue to highlight the differentials. you may be right, by the way. americans may think well let's tax the rich. let's do that. what i'm saying is if they do that, it should be democrats who do it. republicans should not sign off on a policy that raises tax rates. what i would say and i wonder what david's reaction is to this. republicans have to double down on the growth message. maybe you're right, david, that the economy is improving. i'm not quite as sanguine as you are with obama care and the tax rates going up and also the big burden of the debt. but you know, republicans have to have a growth message. and i just don't think they articulated dmind of alternative. david is right. all they talked about was obama's policies aren't working.
10:26am
but if you ask americans today what are republicans for, they don't have a solution. republicans have to talk about choice. charter schools, vouchers, anything that give minorities more opportunities. >> david? >> look, i'm in favor of the republicans being a low tax party. here's the danger. when republicans say taxes, they mean income taxes. 80% of americans now pay more in payroll taxes than they pay in income taxes. payroll taxes will go up at the end of the year. the payroll tax holiday will end. that's a big tax increase for everybody. 80% of americans pay more. and where is the republican plan to hold the line on those people? if taxes only mean the tax, the income tax portion of tax burden for four fifths of the country, you're talking about something that doesn't matter that much. and in a democracy, you cannot be a successful party if you talk about things that don't matter that much to four fifths of the country.
10:27am
>> all right, your paycheck, your investment, your home, they may all be taxed a bit differently next year. that's if law makers can decide on a plan to avoid the fiscal cliff. so coming up next, i'm going to talk about a deduction that america loves, you probably love, but might be taken away. [ male announcer ] this is bob, a regular guy with an irregular heartbeat. the usual, bob? not today. [ male announcer ] bob has afib: atrial fibrillation not caused by a heart valve problem, a condition that puts him at greater risk for a stroke. [ gps ] turn left. i don't think so.
10:28am
[ male announcer ] for years, bob took warfarin, and made a monthly trip to the clinic to get his blood tested. but not anymore. bob's doctor recommended a different option: once-a-day xarelto®. xarelto® is the first and only once-a-day prescription blood thinner for patients with afib not caused by a heart valve problem, that doesn't require routine blood monitoring. like warfarin, xarelto® is proven effective to reduce the risk of an afib-related stroke. there is limited data on how these drugs compare when warfarin is well managed. no routine blood monitoring means bob can spend his extra time however he likes. new zealand! xarelto® is just one pill a day, taken with the evening meal. and with no dietary restrictions, bob can eat the healthy foods he likes. do not stop taking xarelto® rivaroxaban without talking to the doctor who prescribes it for you. stopping may increase your risk of having a stroke. get medical help right away if you develop any signs or symptoms of bleeding, like unusual bruising or tingling. you may have a higher risk of bleeding
10:29am
if you take xarelto® with aspirin products, nsaids or blood thinners. talk to your doctor before taking xarelto® if you currently have abnormal bleeding. xarelto® can cause bleeding, which can be serious, and rarely may lead to death. you are likely to bruise more easily on xarelto®, and it may take longer for bleeding to stop. tell your doctors you are taking xarelto® before any planned medical or dental procedures. before starting xarelto®, tell your doctor about any conditions, such as kidney, liver or bleeding problems. ready to change your routine? ask your doctor about once-a-day xarelto®. for more information including cost support options, call 1-888-xarelto or visit goxarelto.com. he loves risk. but whether he's climbing everest, scuba diving the great barrier reef with sharks, or jumping into the market, he goes with people he trusts, which is why he trades with a company that doesn't nickel and dime him with hidden fees. so he can worry about other things,
10:30am
like what the market is doing and being ready, no matter what happens, which isn't rocket science. it's just common sense, from td ameritrade. you simply cannot have it all. there are not many things they can cut out of the tax code to boost the revenue. there are a few big things that do need to be considered. one of them is the mortgage interest deduction that 40 million of you have been claiming each year. don't throw anything at the tv set. i know you like it. it is expensive. it doesn't really get the government or the housing anything all that great. many countries do not have such a thing and they have higher homeownership rates than the u.s. does. canada is one example. 70% homeownership in the u.s.
10:31am
65% in canada. you have the powerful lobbyists on your side, america, protecting this thing with everything they've got. they may very well succeed in swaying lawmakers to not touch the mortgage interest rate deduction. but you need to know where it came from, who benefits from it and what it costs. so, who better to explain that to us than christine romans? she joins us now. >> it's one of the most expensive. ali, of the tax goodies in the tense and complex tax code. it is the mortgage deduction. it's the middle class's most cherished tax break. it is the third largest tax break on the books. but who is it really helping? it tends to benefit the upper middle class families the most. these bars behind me show income and the circles show the average savings for those with annual income up to $40,000, the average savings is a whopping $91 a year, ali. for those earning more than
10:32am
$250,000, their savings is $5500. 65% of americans live in a home that they own. it was up nearly 70% during the housing boom. now we're back to the same levels in the 1980s. yes, the great recession is partly to blame. we are stuck in this 64% to 69% range. ali, housing industry lobbyists are telling lawmakers, keep your hands off this deduction. you'll hurt home prices and middle class. home prices will plunge immediately and home prices will fall. this is really important on the coasts like chicago, places where there are high home prices. compromise might be the best solution here though, ali, not cutting it out entirely. lawmakers may cap it or limit how much you can claim. there is also talk if the president gets his tax increases on the wealthiest, maybe he'll just leave the mortgage interest deduction alone.
10:33am
stay right where you are. good setup for. this i want to bring in kevin hasset from the american enterprise institute. he was a key romney adviser during the campaign. diane swonk is also with us, she's the chief economist from a financial company. the deduction is getting about $10 billion more expensive every year. but this is money in people's pockets. christine does outline that low income people don't nearly get the benefit of this that high income people do or high value homeowners do. but it is money in the economy. so what's the danger of pulling it out? what does it do to the economy or the housing industry? at this stage of the game, it is very little. i wouldn't eliminate it entirely. this is a major transition. but i do think it needs to be major scaled back so that most americans with benefit from it. but we really would rather have high income americans investing in our future, investment
10:34am
markets and equity markets, things like that rather than in their homes. if they can build multimillion dollar homes, you don't need a million dollar deduction. i don't think that's the best use of government policy. so there are a lot of arguments on both sides of the issue. but i think for the bulk of middle class americans to be able to deduct is very important. this is their single largest asset that he had hold. and they actually hold it in and trade it for a long period of time. it is an asset. it is something they actually trade down into a condo once they sell it. so there is some justification for deductibility there. but let's face it, the high end doesn't neat this extra deduction. it is very distortionary. >> kevin, cutting deductions on mortgage increase will increase the amount people pay in taxes every year. it won't raise income tax rates. something that republicans are against and it will hit as
10:35am
christine and diane points out wealthy americans a little harder. where do republicans come down on this? >> really, the mortgage interest deduction is the worst designed part of the tax code. it is tax candy for people in paradise. it doesn't get anybody in a home. it goes to people who are going to own a home anyway enencourages them to have an addition to their home or something like. that i think die seasane is rig. we need to pair it way back. if you give a tax give away here, you have to have a higher tax rate over there. for me, i think what republicans would like to do is pair back cuts like this and use the revenue to get a lower rate. i think the right way to structure the deduction is to eliminate the deduction altogether but replace it with refundable credit. so if you're a low income person who is the true margin of owning a home, you may not have a very high tax rate. if we give you a generous tax credit, it may get knew a home.
10:36am
that's the way to subcy died homeownership, not to give away the deduction to people who are going to own a house anyway. >> kevin, you always bring up canada. >> we do that every time. >> right. >> new data shows that home prices are up 3.6% from this time compared to this time last year, third quarter of this year compared to the third quarter of last year. new home sales did dip a little bit. fwha but that is less than 10% of the market. if we kill the mortgage interest rate deduction, what's the follow on effect to the housing market? that small part of the housing market is where the jobs are all created. we talked about the growth in new homes being this golden lining around the economic cloud that we're under. >> i think you need to take it in the context of the current economy. first of all, rents are so much higher than the marginal cost of homeownership even before the deductibility. that it is now encouraging foam buy homes to flip to rent for
10:37am
those people who can't get in or qualify on a mortgage rather than just leaving the home on the market. it triggered demand. it is cheaper even without the deductibility than renting to actually buy. that is very important. so you're eliminating some of that movement and some of that cushion on the housing market at a time it's not necessary anyway. you'll still have a lot of activity. you still have a lot of pent up demand. also, ultimately what really matters here is we need to balance our budget deficit. we need to reduce the debt in the economy to reduce interest rates. lower interest rates over the long haul are much more important at holding housing prices high and affordable than mortgage deductibility. i would rather have it coming through fiscal responsibility and giving it a boost to housing price that's way than rather having it coming through the distortions. >> let me ask christine this. there are other deductions i want to show viewers and their expected costs by 2014. in a year, mortgage interest, $
10:38am
billion. prorlt taxes, $27 billion. these are things -- >> and 401(k). >> that is a huge one. all of these things, there are arguments in favor of keeping them because they do certain things. others say social engineering, right? we have the mortgage tax deduction that is supposed to get people to buy houses. as kevin points out, it's unclear whether it really does. >> the whole tax code is a whole experiment in social engineering. diane is talking about the distortion that's the incentive makes, especially for high end housing and the like. that's what it is. it's been just 86 since we had a meaningful revamp of the tax code. it's a big, big mess. you also have lobbyists. we are having this very measured discussion about the benefits and the drawbacks of the mortgage interest deduction. there are lobbyists who are very forcefully giving a very different picture than what we're seeing here in washington. and they do and have had the ear of policymakers for a very, very
10:39am
long time. i wouldn't count them out. they say 15% to 20% decline in home prices. that is something that most elected leaders don't want to have happen to their constituents. >> it feels bad. feels bad to take something. the housing lobby you're talking about has spent $25 million this year in telling congress don't touch this deduction or bad things will happen. diane and kevin, great to have you on the show. christine, thanks so much. listen, maybe we're having the wrong discussion about taxes entirely. i don't think it should be about what rate you pay as it should been what return you get for the taxes you pay. do you think you are getting a good return on your taxes? i think some of you are going to say you don't. if you don't, don't ask the europeans for any sympathy. they're paying substantially more, substantially higher tax rates than you are and they're getting less for it. so are europeans getting ripped off or are you getting a bargain? think about that. so all my stufs always right there in real-time. it's like the ultimate personal assistant. but i'm me, and me needs handlers. so i hired todd to handle it for me.
10:40am
todd, gimme that hollywood news! what's happening on twitter? you're trending! yes! i like you todd. i don't like todd because he's quitting. but now i'm hiring a new todd and it could be you. [ male announcer ] go to workforwill.com and try live tiles, that deliver what you want in real time. only from at&t. rethink possible. but i still have a runny nose. [ male announcer ] dayquil doesn't treat that. huh? [ male announcer ] alka-seltzer plus rushes relief to all your worst cold symptoms, plus it relieves your runny nose. [ sighs ] thank you! [ male announcer ] you're welcome. that's the cold truth! i'm going to dream about that steak. i'm going to dream about that tiramisu. what a night, huh? but, um, can the test drive be over now? head back to the dealership? [ male announcer ] it's practically yours. but we still need your signature. volkswagen sign then drive is back. and it's never been easier to get a passat. that's the power of german engineering. get $0 down, $0 due at signing, $0 deposit,
10:41am
and $0 first month's payment on any new volkswagen. visit vwdealer.com today. bp has paid overthe people of bp twenty-threeitment to the gulf. billion dollars on any new volkswagen. to help those affected and to cover cleanup costs. today, the beaches and gulf are open, and many areas are reporting their best tourism seasons in years. and bp's also committed to america. we support nearly 250,000 jobs and invest more here than anywhere else. we're working to fuel america for generations to come. our commitment has never been stronger.
10:42am
10:43am
. okay. it's a big world out there. we need to look at all of it, left we get a little introspective. so for that, i fwli richard quest for a little q&a. richard, to day we talked taxes. the average income tax rate, i know there are problems with averages here, but the average income tax rate for individuals in the euro zone is 42%, including countries like belgium, germany and france with some rates above 50%. in the united states, the average income tax rate is 29%. federally, 39.6% is the highest rate. someone will pay in the united states. so for today's q&a, are americans getting a bargain or are europeans getting ripped up? let me go first. 60 seconds on the clock starts right now. economies richard cost money to
10:44am
run. there is misplaced popularity in the libertarian myth that governments don't need to involve themselves in most economic matters and that markets will handle whatever needs to be handled. we need taxes. and we need safety and services and infrastructure in return. in some cases, it is simply more economical for governments to provide services because a scale. health care might be one example. the building and maintenance of smart grids and roads. so think of taxes not as needing to be low but of the return from those taxes of needing to be high. now traditionally, richard, that worked in europe. now it doesn't. they got the math badly wrong. so what once provided a high return is now an utter failure which makes america a tax bargain. but that is going to change, too, richard. so the solution is to move to canada where taxes are low, government offerings are high. you, sir, can come and live with me and sleep on my sofa.
10:45am
>> and here we go. whoever thought that this was going to be the pimpco socialism of the business world. but there we saw him in his true colors. the truth of the matter is as one famous judge in britain once said, it is every man's duty to avoid paying taxes. it is no man's duty, no man's duty to evade paying them. and that is the threshold upon which we seek. however, bearing in mind there are deficits that have to be covered. and there are spending that has to be reached. and in that environment, there is no other alternative but for higher taxes. do you think europeans like paying 40, 50% taxes? but the alternative is not nearly so pleasant. i've just been to iceland, high taxes, high rate of living. and an economy that is actually recovering better than anywhere else from the financial crisis.
10:46am
so ali velshi, do taxes have to rise? yes, in the united states. >> richard, always my pleasure to see from you across the pond. richard quest. let's talk about where the taxes sometimes go. infrastructure, superstorm sandy exposed dangerous flaws in u.s. infrastructure. coming up next, i'll tell you how investing in infrastructure will not only help get the power back on faster after the next storm but could be the key to jobs and the boom we've all been waiting for. you are watching "your money" on cnn. ♪
10:47am
♪ ♪ [ male announcer ] everyone deserves the gift of all day pain relief. this season, discover aleve. all day pain relief with just two pills. [ male announcer ] a european-inspired suspension, but it's not from germany. ♪ a powerful, fuel-efficient engine, but it's not from japan. ♪ it's a car like no other... from a place like nother. introducing the all-w 2013hevrolet malibu, our greatest malibu ever.
10:48am
♪ wanted to provide better employee benefits while balancing the company's bottom line, their very first word was... [ to the tune of "lullaby and good night" ] ♪ af-lac ♪ aflac [ male announcer ] find out more at... [ duck ] aflac! [ male announcer ] ...forbusiness.com. [ yawning sound ]
10:49am
americans in the path of superstorm sandy know that investing in infrastructure will help protect against storms. it is also one of the best things we can do to protect ourselves from economic storms as well. american infrastructure was in poor shape even before sandy hit. the american society of civil
10:50am
engineers gives u.s. infrastructure a grade of d. guess what? energy infrom struastructure di better. it got a d plus. the u.s. is spending money on the electrical grids and power plants. but according to the american society of civil engineers, that falls short billion. so what would the u.s. get for that $100 billion, an extra $11 billion every year. let me tell you, the american society of civil engineers say if you spentd the $11 million, this is a multiplying faeth, you get an extra $55 billion in economic output. it protect 461,000 jobs, generate $73 billion in disposable person income, and create $94 billion in business sales. michael is a senior national correspondent for "time" magazine and the author of "the new deal, the hidden story of
10:51am
change in the obama era." in his book, he argues for increased investment in energy infrastructure. welcome to the show. superstorm sandy lev 7.9 million people without power, some for weeks. you say the elect kctrical grid slowly improving. would any of the changes we're talking about had a different effect on what people in the northeast went through as a result of hurricane sando or are we talking about apples and oranges? >> no, it has a difference. president had $11 billion for a smarter grid in his much maligned stimulus bill in 2009. as a result, for instance, in the washington, d.c. area, the utility was able to get just about everybody their power back in two days because with a smart grid, and that's essentially mixing up modern information technology with that ancient electrical grid we've got, but with smart meters and digital
10:52am
routers and sensors. they were able to figure out where the problems were on their grid, route power around it, and without having to send a million trucks out to try to figure out where the lines were down and without having to send meter readers to see who didn't have power. they could do it just about automatically, and they were able to get things rolling within two days. >> you're talking about the smart grid. one of the proposed solutions is to improve the usage and reliability of the smart grid that allows, as you said, for two way communication between utilities and devices like transformers and meters. it can detect the equipment that is about to fail or has failed. it can pinpoint outages and m n means lower operational costs for utilities and one hopes for consumers. the government will spend around $6 billion on the smart grid between 2009 and 2014. is there the political will to increase investment in this sort
10:53am
of thing because we're used to the lights going on when we switch them on? so we don't think we should be spending a lot of money on these things. >> exactly. infrastructure is something people don't think about in their everyday lives. we assume the lights will go on. but you have something like 2003 where a tree branch goes down in cleveland and wipes out power in eight states and you have a bigger problem. the smart grid will help the system self monitor and self heal. essentially, you look at telecommunications where if alexander graham bell came back today, he would be shocked, flabbergasted seeing what we got. if thomas edison went to a substation, he would feel at home. he would recognize all of the gizmos. the idea of the sink rophasers and the routers that go right to your home is sort of, you have this situational awareness so that people know what's going on
10:54am
at the utility end but also for people in your home, you have more power over your energy use. you know which appliances aren't working. eventually, you aplienlss will be able to talk to your utility directly. and it also will allow you to use more renewable energy. if you think of the modern grid as sort of like the old operators who used to have to connect every call manually, with a smart grid, when you -- you can have the more intermittent power when the wind stops blowing or the sun stops shining, it happens more automatically. that's good for everyone. >> one of the conversations that took place in a lot of communities after superstorm sandy is the idea that some places like new york city have their power wires underground. other places are susceptible to trees and things falling. george pataki said serious consideration has to be given to burying electrical distribute
10:55am
wires underground, drastically reducing the need for repairs caused by wind and tree damage. sounds entirely reasonable and sensible and you say that's crazy. >> i mean, i think it is reasonable in some areas. a line goes down, it sometimes makes sense to bury it. we have a lot of electricity lines in the country. putting them underground, we're go longer looking at illions with a b in front of it. you're looking at trillions. these are investments that utilities have to make and are paid for by rate payers. utilities are starting to build a lot more transmission on their own. and you know, they are trying to harden their systems, but again, by smartening up, by making it so that, you know, when the wind knocks a line down, it isn't such a catastrophe, that's a lot cheaper and smarter way to start fixing our system than to try to put this entire above ground network that we have to start
10:56am
digging billions of holes and putting everything underground. >> michael, good conversation. thanks very much for joining us. senior national correspondent of "time." with the fiscal cliff on the horizon, americans are learning a lot about the politicians their hired. my final thoughts on this, the tax pledge standing in the way of compromise when we get back. you're watching "your money." helping millions of americans retire on their terms. when they want. where they want. doing what they want. ameriprise. the strength of a leader in retirement planning. the heart of 10,000 advisors working with you one-to-one. together for your future. ♪ or that printing in color had to cost a fortune. nobody said an all-in-one had to be bulky.
10:57am
or that you had to print from your desk. at least, nobody said it to us. introducing the business smart inkjet all-in-one series from brother. easy to use. it's the ultimate combination of speed, small size, and low-cost printing.
10:58am
10:59am
this is it, the famous tax pledge we have been talking about created by grover norquist back when ronald reagan was president. timed have changed since then. i had hair back then. some lawmakers are starting to understand it's not just low tax rates that matter. it's the rate of return the taxpayers get in paying the taxes. what do they get in support, in services? washington has a lot of work to do to avoid the fiscal cliff and fix our debt issues and i'll keep bringing you the lawmakers, economists, and